CUSTOMS-NOTES
The materials contained in this document have been prepared George R. Tuttle Law Offices for informational purposes only. The information contained is general in nature, and may not apply to particular factual or legal circumstances. In any event, the materials do not constitute legal advice or opinions and should not be relied upon as such.
March 29, 2001
PRESERVED
MUSHROOMS GROWN IN CHINA
BUT
IMPORTED INTO THE UNITED STATES
New shippers of Chinese
mushrooms should seek accelerated reviews of their products to obtain lower
antidumping margins. For example, the
Department of Commerce (Commerce), recently completed its review of two shippers of
preserved mushrooms from China.
Commerce’s results were as follows:
Raoping Xingyu Foods Co., Ltd. 47.80%.
As a
result the AD margin specific to Raoping will be substantially lower than the
China wide AD rate, (currently over 198.63%) on entries for the period
of review and for all future entries.
Generally,
the best method to reduce the AD duties is to file with Commerce a request for
an “Administrative Review” of the AD margins for the product in issue. Commerce then must investigate and
recalculate the appropriate antidumping margin. With careful planning, and the submission of key financial and
import data, the Department can often be persuaded that the antidumping rates
should be lowered.
For exporters who were shipping during the original AD
investigation, such a request can be filed only once a year during the
“anniversary” month of the AD order.
The AD anniversary month is determined by the date on which the original
AD order was issued
For the AD order on certain preserved mushrooms from
the PRC, the anniversary month is February.
As such, the next opportunity for an exporter (other than a new shipper)
to file requests for an administrative review would be during the period of
February 1 – 28, 2002. A current
PRC-wide antidumping duty rate for preserved mushrooms from the PRC is 196%.
A “new shipper” is an exporter or producer that did
not export during the initial antidumping
(AD) investigation. The
procedures for obtaining a rate specific to a new shipper review are somewhat
easier than for other companies and are as follows: (1) the new shipper files a
request for a review to the Commerce Department, (2) the review is accepted by
Commerce, (3) Commerce initiates the review, (4) Commerce’s conducts an
investigation, and the new shipper produces financial of information, (5)
Commerce publishes a rate specific to the new shipper.
Fortunately, under a recent law, Commerce is required to provide an accelerated
review for requests received from new shippers.[1] In addition, the new shipper may file at any
time for such an administrative review, (generally, shippers must wait until
the “anniversary month” of an investigation before filing a request for
review).
Once the request if filed, Commerce will formally
“accept” the reviews on a bi-annual basis (during at the end of the anniversary
month of the AD order, or six months after that date), depending upon when the
petition is filed. Once accepted, the
initiation of the investigation will be published. Next, Commerce will conduct its review, and will publish a rate
specific to the new shipper at the conclusion.
For example, the anniversary month for the AD order on mushrooms from
the PRC is February. Therefore, the
next opportunity for Commerce to accept a new shipper of certain preserved
mushrooms from the PRC will be in August 2001 or February 2002. If such a request for review is received,
Commerce will review all entries of that shipper during the six calendar months
that proceeded the month of the request.
Commerce will then publish a rate specific to the new shipper, which
apply to the 6 months of entries reviewed and also to all future entries.
4. Country
Of Origin And Marking Of Imported Canned Mushrooms
There has been increased scrutiny by
the Customs Service as to the proper country of origin and marking of canned
mushrooms imported into the United States. This is a particularly sensitive area where
the mushrooms are canned in a third-market country prior to importation into
the United States.
Customs Ruling HQ 060272, dated March 14, 1979, created
some confusion to importers. The ruling
determined that the certain processing operations (retorting operations to
create canned mushrooms), performed in intermediate countries would result in a
substantial transformation.
Normally, a substantial transformation changes the country
of origin of the product. Thus, based on Customs ruling (above), some importers
assumed that mushrooms from an intermediate country should be entered and
marked as originating from that intermediate country.
Unfortunately, these importers were not aware that an
exception to the general rule exists for canned mushrooms. Section 1907(b)
of the Omnibus Trade and Competitiveness Act of 1988, (Pub. L. No. 100-418),
requires that canned mushrooms be marked according to the country of growth. Hence, even if PRC mushrooms are retorted
and substantially transformed in an intermediate country before shipment to the
U.S., such mushrooms must still be marked as a product of the PRC.
Importer’s who are mis-marking this item may be subject to marking
penalties, and other penalties pursuant to Title 19 USC 1592 for negligence or
fraud. Such importers are advised to
seek the assistance of experienced counsel to discuss their case and if
necessary to file disclosures with Customs as a means of limiting liability.
Customs is now particularly concerned with mushrooms grown in the PRC,
Chile, Indonesia, or India, (for which countries AD orders are in effect), if
these mushrooms are shipped to an intermediate country, retorted into canned
mushrooms, and thereafter shipped to the United States.
There had been some ambiguity as to whether the
government would require importers to enter such mushrooms as subject to AD
duties and to deposit AD duties on entry. To clarify matters, the U.S. Coalition
on Mushroom Trade recently requested that Commerce provide a ruling to
importers as to whether the PRC antidumping order applies to mushrooms retorted
in an intermediate country. In
response, the Commerce ruled that such retorted mushrooms do indeed fall within
the scope of the antidumping order.
While we are working to have this decision changed,
importers who have been importing such PRC mushrooms from intermediate
countries without depositing antidumping duties may be required to deposit AD
duties on previous imports and assessed penalties. Again, such importers are advised to immediately seek competent
legal advice and if necessary consider filing a prior disclosure to limit their
Customs liability.
Importers should carefully plan their strategy well in
advance of importation. And seek experienced professional advice prior to
pursuing any of the avenues outlined above to reduce or eliminate antidumping
duties or limit liability.
If you have any questions on any of the issues raised in
this newsletter, please contact George R. Tuttle, Sr. for additional
information by phone or via email at grt@tuttlelaw.com.